Economic downturn slams door on affordable housing projects

Monday

Mar 1, 2010 at 12:01 AMMar 1, 2010 at 1:17 AM

At a time when demand for affordable housing is greater than ever, fewer such units are being built around the South Shore – stymied by tepid banks, anxious neighbors and a still sluggish real estate market.

Steve Adams

At a time when demand for affordable housing is greater than ever, fewer such units are being built around the South Shore – stymied by tepid banks, anxious neighbors and a still sluggish real estate market.

In some cases, developers spent years before town boards fighting to get key approvals. But now, for the most part, it’s not town officials or residents but lenders and builders who are pushing back to delay and, in some cases, derail once highly touted projects.

“Because of the economy, not a lot of projects are being financed or constructed right now,” Hanover town planner Andrew Port said.

Many developers are reluctant to move until comparable homes in the area are selling at a brisker pace, said Judy Jenkins, president of the Home Builders Association of Massachusetts.

“The developer looks at the market and says ... ‘Is it going to be profitable?’” said Jenkins, who owns Canton-based builder Can-Four Corp. “Because of that, you get hesitation on the lenders’ side as well.”

Last week, after four years of seeking town approvals for one of the largest smart-growth proposals in Massachusetts history, Thorndike Development said it would abandon plans to build 730 homes and 300,000 square feet of commercial space near the Kingston MBTA rail station.

Lloyd Geisinger, head of the Norton development company, said it was the lender that pulled the plug: A recent appeal of a state environmental ruling prompted lender South Shore Savings Bank to withdraw financing.

The Kingston endeavor, while one of the biggest, is not the only project with a major affordable housing focus to fall flat of late. Here are some others:

Despite getting final approval for a 200-unit apartment complex in Cohasset in 2008, AvalonBay Communities has yet to begin construction. The company recently notified town officials that it plans to resubmit plans under a state program that offers different financing arrangements, said Jennifer Oram, administrative assistant to the zoning board of appeals.

Braintree developer John M. Corcoran & Co. withdrew plans for 198 apartment units in Norwell – a development dubbed Norwell Commons – last year because of economic conditions.

Developer Richard Lincoln of Bridgewater gained Hanover officials’ approval for 44 two-bedroom homes off Webster Street in 2007 just as the real estate market was entering a steep downturn. But work hasn’t begun yet on the 15-acre parcel near the Norwell line, named Webster Village.

Citing financial problems, Boston developer Merrill Diamond announced this month he would not go forward with plans to develop a 28-unit 40B project at the former Pier 44 restaurant site on Scituate Harbor.

Court challenges by neighbors, a common obstacle to affordable housing projects, continue to delay developments such as the 80-unit Simon Hill Village condo complex in Norwell. It was approved last July but has been unable to start construction because of a court appeal.

Such neighbor and legal opposition used to be the chief challenge for projects proposed under Chapter 40B, the state’s affordable housing law. But the economy is now a bigger issue: Statewide, about 15,000 housing units have been approved but not yet built under Chapter 40B, according to the Boston-based Citizens’ Housing and Planning Association. The number does not include another 2,000 units that have been delayed by court or administrative appeals, association Executive Director Aaron Gornstein said.

The fate of Chapter 40B may be on the ballot in November if supporters get enough signatures to repeal the article and nullify permits of approved but not yet started developments. While supporters call it a way to ensure the availability of affordable housing, critics say 40B enriches developers by overriding zoning bylaws designed to protect local communities.

Still, whether or not the petition prevails, affordable housing projects already face increasing difficulty. And in the meantime, builders are asking state lawmakers for help keeping stalled developments alive.

A bill filed by state Rep. Michael Rodrigues, D-Westport, would extend the expiration date on subdivision permits issued between January 2008 and January 2010 for two years.

“You’re starting (permitting) years in advance and the market can turn, as we’ve seen,” said Jenkins of the builder’s association, which backs the bill. “And it can stay turned for a long time.”

Patriot Ledger writer Steve Adams may be reached at sadams@ledger.com.